As competition to attractinternational production heats up, territories from Scandinavia to the Balkansare trying to woo big-budget, runaway films by offering new tax breaks.

Serbia is the latest countrylooking to join the tax credit bandwagon. The new Serb incentive is likely tobe worth 21.5% in total to both local and international productions set up inthe country. The Serbs delayed announcing the new measure in Cannes because ofthe referendum being held this week to determine whether or nor Montenegro willterminate its union with Serbia.

Djordje Milicevic,chief-executive of Film Centre Serbia (FCS) was striking a bullish note aboutSerbia's potential to eclipse Bulgaria, Romania and Hungary as a productionbase.

'We're definitely lessexpensive,' Milicevic said, drawing attention to Serbia's low labour costsand skilled crews.

Building is nearly completeon a major new studio complex by Pink Films international at a site close toBelgrade Airport.

As the Serbs ramp up, theNorwegians, too, are promising tax breaks. Norwegian culture minister TrondGiske was on the Croisette this weekend to give more details of the proposed15% tax incentive for Norwegian film production.

'It (the tax break) isabout getting foreign productions to Norway. That's the main intention behindthe proposal but it's also about keeping Norwegian production in Norway andhaving more co-productions,' he said.

A white paper is currentlybeing prepared that will give fuller details of how film financing is to beoverhauled. 'We haven't made a Cabinet decision yet on how this should beorganised,' Giske said, but insisted that the Labour Party is fullycommitted to the local film industry.

'We have a very strongpolitical will now to support Norwegian film,' he said. 'We haveincreased the number of films we are making and we have increased productionbudgets.'

Norway has a record fourfilms in official selection in Cannes. The titles screening are Jens Lien's TheBothersome Man, ChristopherNielsen's Free Jimmy, StefanFaldbakken's Uro as well as shortSniffer. Just prior to Cannes,Giske's culture ministry agreed to invest an extra $12,000 into the promotionof the Norwegian films in Cannes.